[Budget of the United States Government]
[II. Building on the Success of Our Fiscal Discipline]
[From the U.S. Government Publishing Office, www.gpo.gov]


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          II.  BUILDING ON THE SUCCESS OF OUR FISCAL DISCIPLINE


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          II.  BUILDING ON THE SUCCESS OF OUR FISCAL DISCIPLINE

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    We made the tough choices to reduce the deficit and balance the budget the right way. Year in and year out,
we have resisted politically attractive, but economically unwise tax cuts that would have abandoned this
commitment and taken us in the wrong direction . . . And in the last two years alone, we had paid down our
Nation's debt by $140 billion, the largest debt reduction in our Nation's history. We have closed the book on
deficits and opened the door on a new era of economic opportunity . . . Debt reduction really means a tax cut,
and a sizeable one, for America's families. It proves that putting our fiscal house in order helps every
American household.

                                      President Clinton
                                      October 1999


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  The dawn of this new century has brought with it extraordinary 
opportunities for the American people. Today, our economic success is 
unparalleled and we are poised to enter the longest economic expansion 
in our Nation's history. From the largest Federal budget deficit in 
history only seven years ago we have produced the largest surplus in 
history. Moreover, with our fiscal house in order, we have started to 
pay down the national debt held by the public, and if we maintain sound 
fiscal policy, we can eliminate the debt in the next 13 years, making 
the United States debt free for the first time since 1835.
   When President Clinton took office seven years ago, the Federal 
budget deficit had exploded. It dominated the Government's ability to 
make policy and imposed an insidious burden on our economy. In 1992, the 
$290 billion deficit--the largest in American history--was projected to 
continue spiraling upward without restraint. The economy suffered, 
interest rates were high, and job creation stalled. Capital that should 
have been used for productive investments to create new jobs instead was 
used to finance the Government's massive deficit-driven borrowing.
  We can now look back with pride at our progress and ahead with 
confidence as we consider the success of our fiscal discipline and the 
opportunity we have to build upon it. Today, we have lower interest 
rates, a higher level of investment, and unprecedented prosperity. Our 
economy has added more than 20 million new jobs. The unemployment rate 
is the lowest in 30 years, the welfare rolls are down by more than 50 
percent since 1993, the core inflation rate is the lowest in 35 years, 
and more Americans own their own homes than at any time in our history.
  Tomorrow holds even greater promise. The President's deficit reduction 
policy has produced historic surpluses and has put us on a path to pay 
down and eliminate the debt. Compare that to the record of the past. In 
the 12 years before the President came to office, the debt had 
quadrupled and equaled nearly 50 percent of the Nation's annual 
production, draining funds that could have been devoted to other uses in 
order to pay the interest costs on the debt. If the President had not 
adopted the policy of aggressive deficit reduction the debt was 
projected to double again, nearing 70 percent of the Nation's economy by 
2001 and imposing nearly $400 billion in interest costs next year. 
Instead, as the debt begins to reverse course and head downward, we have 
an extraordinary opportunity to make America debt free by 2013.


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  The President's plan to save Social Security would protect the entire 
Social Security surplus and dedicate it to debt reduction, and would 
extend the solvency of the program to mid-century. The President also 
proposes to extend the solvency of Medicare until at least 2025, and to 
modernize the program with a needed prescription drug benefit. Paying 
down the debt will improve the Nation's ability to uphold existing 
commitments to Social Security, freeing resources that would have gone 
to interest costs and devoting them instead to extending the solvency of 
the program. The President's sustained commitment to saving Social 
Security already has produced agreement that it is essential to protect 
the Social Security trust fund. It is time to meet the challenges of 
this new century to ensure that we extend the solvency of Social 
Security and uphold our commitments to generations to come by investing 
in the future.

The President's Agenda: The Path to Prosperity

  The President has achieved one of his first and most important goals: 
to get the economy moving again. He did this by spearheading a 
controversial and courageous program to revive the Nation's economy. His 
economic strategy was built upon three elements: fiscal discipline; 
investing in policies that strengthen the American people; and, engaging 
in the international economy, including expanding global trade.
  The President's 1993 economic plan, which he worked with the Congress 
to enact, was the centerpiece of this strategy. It cut spending, slowed 
the growth of entitlements, and raised taxes on only the very wealthiest 
Americans. At the same time, this plan cut taxes for 15 million working 
families and made 90 percent of small businesses eligible for tax 
relief. And, it began an ongoing effort to invest in education and 
training and in research to boost productivity and, thus, promote higher 
living standards.
  His three-pronged plan of deficit reduction, international engagement, 
and targeted investments provided resources for the American people. The 
plan both ensured that key investments for the American people 
strengthened their prospects for the future, and took broader fiscal 
measures to put the Nation's economy on the right track.
  Despite critics' predictions that this strategy would fail, causing 
recession and even larger deficits, the President's plan built the 
foundation for the great prosperity that is America's today. In the 
summer of 1997, the President and the Congress joined together in an 
historic agreement to finish the job of balancing the budget. The 
results of this bipartisan action, the Balanced Budget Act (BBA), 
provided the final push, bringing the budget to balance a full four 
years earlier than projected. Like the President's 1993 plan, the BBA 
also provided for strategic investments in the American people.

The Record of Fiscal Discipline and Targeted Investments

  The 2000 Budget maintained fiscal discipline, protected the surplus, 
forged a path of debt reduction, and did so while providing resources 
for a strategy of targeted investments to maintain economic growth and 
provide for the future needs of the Nation. The President worked with 
Congress to establish and build upon significant investments in 
education and training, the environment, law enforcement, and other 
priorities. For example, last year the President's commitment has:
  Provided the second year's investment to reduce class size by 
          hiring 100,000 new teachers. Smaller classes ensure that 
          students receive more individual attention, a solid foundation 
          in the basics, and greater discipline in the classroom. In its 
          second year, the class size initiative has already reduced 
          class size in participating schools by an average of five 
          students. The proposed investments in this area will reduce 
          class size in the early grades to a national average of 18 
          students.
  Increased Head Start's ability to provide greater 
          opportunities for disadvantaged children to participate in a 
          program which prepares them for grade school. In 2000, a boost 
          in Head Start funding will put 880,000 children into the 
          program, making further progress toward the President's

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          goal of putting a million children in Head Start by 2002.
  Established the 21st Century Policing Initiative, which builds 
          upon the success of the President's Community Oriented 
          Policing Services (COPS), that added 100,000 police officers 
          to local beats and has contributed to the Nation's lowest 
          crime rate in 25 years. The 21st Century Policing Initiative 
          provides funding for up to an additional 50,000 officers by 
          2005, provides significant funds for the latest anti-crime 
          technologies, and engages communities in fighting crime by 
          funding new community-based prosecutors and partnerships with 
          parole officers, school officials, and faith based 
          organizations.
  Created Lands Legacy, an historic interagency initiative, 
          which strengthens efforts at the local, State, and Federal 
          levels to preserve our national heritage by protecting the 
          Nation's natural treasures and historic places for Americans 
          today and tomorrow. Funding for Federal land acquisition will 
          protect for future generations precious natural and historic 
          sites, including parks, forests, wildlife refuges, and 
          environmentally sensitive lands throughout the Nation.
  Protected and restored some of the Nation's most treasured 
          lands, such as Yellowstone National Park, the Everglades, and 
          California's redwoods, provided the funds to conserve many 
          others, and accelerated toxic waste clean-ups.
  Advanced cutting-edge research with an increase last year for 
          the National Institutes of Health of $2.3 billion--a total of 
          $7.5 billion since 1993--an increase of 73 percent by 2000, to 
          support a portfolio of research including intensified work on 
          diabetes, cancer, genetic medicine, and the development of an 
          AIDS vaccine.
  Last year, the President also proposed a budget that respected fiscal 
discipline, met the Nation's needs of today, and planned to uphold our 
commitments for the future. In his 2001 Budget, the President maintains 
the course of fiscal discipline, proposes a plan to extend the solvency 
of Social Security and Medicare and provides the resources for targeted 
investments to keep our Nation's economy and its people strong. The 
budget offers balanced tax relief and provides for the pressing needs of 
today, including expanding health care coverage for America's hard 
pressed working families. The budget does so in a way that balances 
these essential needs, and upholds fiscal discipline now and in the 
future.

Improving Performance Through Better Management

  A key element in the Administration's ability to expand strategic 
investments and keep the budget balanced is improving performance 
through better management. Improved stewardship of the Government can 
help it better achieve its mission and improve the quality of life for 
all Americans. To this end, the President and Vice President have 
streamlined Government, reducing its work force by 377,000, and 
eliminated obsolete or duplicative programs.
  The Administration, however, is working to create not just a smaller 
Government--but a better one, a Government that provides services and 
benefits to its ultimate customers, the American people. When Government 
works for the people--when citizens receive good basic services and have 
faith in the Government that provides them--their trust in Government 
can be restored.
  Therefore, the Administration is forging ahead with new and additional 
efforts to improve the quality of the service that the Government offers 
its customers. It has identified its highest priorities--24 Priority 
Management Objectives (PMOs) that will receive heightened attention to 
ensure positive changes in the way Government works. These PMOs include 
modernizing student aid delivery, implementing IRS reforms, and 
strengthening the management capacity of the Health Care Financing 
Administration, which oversees Medicare. (For a full discussion of the 
Administration's management agenda, see Section V, ``Improving 
Government Performance.'')


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Investing in the Future to Save Social Security and Medicare

  President Clinton, through his sustained commitment to save Social 
Security, has lead the way and has built support for general agreement 
that it is essential to protect the Social Security trust fund. The next 
challenge in saving Social Security is to secure and dedicate resources 
to extending the solvency of Social Security. The President has proposed 
a framework for saving Social Security; it builds upon our successful 
fiscal discipline and the resources it has provided to the Nation. The 
President proposes to devote the entire Social Security surplus to 
paying down and eliminating more than $3 trillion of debt held by the 
public by 2013. This will produce substantial interest savings that can 
be used to strengthen and extend the solvency of the program. The 
President's plan commits a portion of the benefits that have resulted 
from the successful strategy of fiscal discipline by dedicating the 
interest savings to the Social Security trust fund, extending its 
solvency to the middle of the century.
  It is essential that the Nation uphold its existing commitments to the 
Medicare program, upon which elderly Americans depend, while modernizing 
its prescription drug benefits. The President's plan extends the 
solvency of the Medicare program by relying on the benefits of debt 
reduction to strengthen and extend the life of the program, and 
dedicates $299 billion of the budget surplus over 10 years. This will 
extend the solvency of Medicare to at least 2025, preserving access to, 
and quality of, the program's benefits that are an essential part of our 
Nation's commitment to aged Americans.
   While preparing for the demographic changes of the future, this 
budget also builds upon efforts to invest in the American people, to 
meet the pressing needs of today, and to lay the foundation to meet 
those of the future. The budget continues this policy of helping working 
families with their basic needs--raising their children, sending them to 
college, and expanding access to health care. It also invests in 
education and training, the environment, science and technology, law 
enforcement, and other priorities to help raise the standard of living 
and quality of life of Americans.
  The President is proposing major initiatives that will continue his 
investments in high-priority areas--from expanding access to health care 
for more low-income children and their hard working parents through the 
SCHIP health insurance program; to allowing Americans from 55 to 65 to 
buy into Medicare; to expanding the Earned Income Tax Credit for hard 
working, low-wage families and helping with their child care expenses, 
to helping States and school districts recruit and prepare thousands 
more teachers and build thousands more classrooms; and, to making every 
effort to fight gun violence in our society.

  Families and Children: For seven years, the President has sought to 
help working families balance the demands of work and family. In this 
budget he proposes a major effort to expand the Earned Income Tax Credit 
to help lift up hard working, low-wage families, to make child care more 
affordable, accessible, and safe by expanding child care tax credits for 
middle-income families and for businesses to expand their child care 
resources, and increasing funds with which the Child Care and 
Development Block Grant can help more poor and near-poor children. The 
budget proposes to create the Early Learning Fund, which would provide 
grants to communities for activities that improve early childhood 
education and the quality of child care for those under age five. It 
also promotes responsible fatherhood both with measures to encourage 
child support and to help fathers enter and stay in the work force to 
meet their responsibility to their families.
  Health Care: The President has worked hard to expand health care 
coverage and improve the Nation's health. His budget proposes a plan to 
extend the solvency of Medicare to 2025, while modernizing the program 
with a needed prescription drug benefit. The budget gives new insurance 
options to hundreds of thousands of Americans aged 55 to 65. In 
addition, it proposes an expansion of the successful SCHIP program to 
reach additional low-income children and their hard working parents.
  The President's budget proposes initiatives to help patients, 
families, and care givers cope with the burdens of long-term care.

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The budget also enables more Medicare recipients to receive promising 
cancer treatments by participating more easily in clinical trials.

  Education: The President has worked to enhance access to, and the 
quality of, education and training. The budget takes the next steps by 
continuing to help States and school districts reduce class size by 
recruiting and preparing thousands more teachers and building and 
repairing thousands more classrooms. The President proposes improving 
school accountability and supporting student achievement by promoting 
high standards and providing the support to meet them, including funding 
additional education hours through programs like the 21st Century 
Community Learning Centers. The budget also proposes further increases 
in the maximum Pell Grant to help low-income undergraduates complete 
their college education.
  Environment: The Administration proposes building upon the historic 
interagency Lands Legacy initiative to both preserve the Nation's 
natural and historic treasures and advance preservation of open spaces 
in every community. This budget provides significantly increased funding 
for this effort, and establishes a dedicated and protected source of 
funding to continue these efforts in the years ahead. This initiative 
will give State and local governments tools for orderly growth while 
protecting and enhancing green spaces, clean water, wildlife habitats, 
and outdoor recreation. The Administration also proposes a Livable 
Communities initiative to further creation of open spaces in urban and 
suburban areas, ease traffic congestion, improve water quality, and 
clean up abandoned industrial sites. In addition, the budget proposes 
funding to accelerate efforts to address the threat of global warming, 
including energy-efficient technologies and tax credits for the purchase 
of energy-efficient cars; to restore and rehabilitate national parks, 
forests, wildlife refuges, and other public lands and facilities; to 
expand efforts to restore farmland and protect the water quality of 
rivers and lakes; to continue efforts to increase the number of 
Superfund cleanups; and, to protect endangered species.
  International Affairs and Defense: The President has worked to bring 
peace to troubled parts of the world. He stood firm in the fight against 
the vicious campaign of ethnic cleansing in Kosovo, and now is working 
to restore peace, stability, and democracy there. The United States has 
played a leadership role in Northern Ireland, Bosnia, and the Middle 
East. This budget also provides critical assistance to the people of 
Colombia whose democratically elected Government has developed a multi-
year strategy to fight narcotics traffickers.
  The 2001 Budget also supports debt relief as a way to help lift up the 
poorest nations of the world, thereby advancing stability, economic 
growth and, in turn, promoting global trade. Attacks on U.S. embassies 
abroad have shown there are inherent dangers in the work of diplomacy. 
This budget builds on last year's multi-year plan, with increased 
funding to ensure the continued protection of American embassies, 
consulates and other facilities, and the valuable employees who work 
there. It also supports significant increases in funding for State 
Department programs to address the threats posed by weapons of mass 
destruction. The budget also increases funding for programs that support 
U.S. manufacturing exports and continues our long standing policy of 
opening foreign markets.
  The mission of our Armed Forces has changed in this post-Cold War era, 
and in many ways it is more complex. Today, the U.S. military must guard 
against major threats to the Nation's security, including regional 
dangers like cross-border aggression, the proliferation of the 
technology of weapons of mass destruction, transnational dangers like 
the spread of drugs and terrorism, and direct attacks on the U.S. 
homeland from intercontinental ballistic missiles or other weapons of 
mass destruction. The U.S. Armed Forces are well prepared to meet this 
mission. This budget builds upon last year's sustained increase in 
funding for military readiness by providing additional resources, and 
builds for the future through programs for weapons modernization, and to 
support military personnel and their families by enhancing the quality 
of life, thereby increasing retention and recruitment.

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Looking Ahead

  At the start of this new century, the Nation is blessed with 
prosperity and a renewed spirit of confidence. There is much to be proud 
of in America today. We have not simply put our fiscal house in order by 
balancing the budget; we have left behind an era in which the budget 
deficit constrained the Government's ability to make wise choices about 
the future.
  Today, our prosperity, purpose, and renewed confidence have prepared 
us to meet new challenges--spreading opportunity to all corners of our 
Nation, continuing to invest in the American people, and holding fast to 
the strategy of fiscal discipline that has been critical to our success. 
We must make efforts to reach those who have not yet been touched by 
this current wave of prosperity, giving all Americans the chance to 
share the values of community, opportunity, and responsibility. We must 
continue to invest in the American people--by preparing them through 
education and training to compete in the global economy, by funding the 
research that will lead to the technological tools of the next 
generation, by helping working parents balance the twin demands of work 
and family, and by providing investment to our distressed communities in 
order to bridge the opportunity gap. And, while we pursue and meet these 
challenges, we must not lose sight of the critical element that has been 
the source of so much success--our firm commitment to fiscal discipline.
  We now have an opportunity to meet the pressing needs of today and 
provide for the needs of the future. Our strategy of fiscal discipline 
means that with a continuation of sound fiscal policy, we will be able 
to eliminate the debt and extend the solvency of Social Security and 
Medicare while modernizing the Medicare program with a needed 
prescription drug benefit. We can do so while meeting the need for 
targeted investments to keep our economy growing in the future and while 
addressing the pressing needs of today. We are prepared to keep the 
Nation strong by continuing to invest in the American people.
  This is truly an exceptional moment in America--the economy is 
prosperous, the budget is in balance, and we have a unique opportunity 
to plan for the future. Seven years ago, at the start of this 
Administration, few would have imagined that our Nation would enjoy such 
prosperity and opportunity. Today, as we measure and acknowledge the 
remarkable progress of the past seven years, it is our obligation to 
look forward to future generations and to make the best choices possible 
so that they too can share in the extraordinary opportunity and 
prosperity of America.
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